But the county gets stuck with big fees under a contract between the credit card companies and the county that was negotiated by the Treasurer's Office.

Treasurer Joy Logan said Thursday the weak economy more than doubled the use of credit cards to pay taxes last year, which in turn multiplied the county's fees.

Some council members at a Finance Committee meeting Monday were surprised to learn that $1.5 million in credit card fees was charged to the county for fiscal year 2009-2010.

"You mean to tell me our fund balance is getting hit to the tune of $1.5 million this year because of a contract negotiated by the Treasurer's Office that we haven't seen and didn't approve?" asked Council Vice Chairman Paul Sommerville.

She said the amount collected from credit card payments jumped from $25 million to $40 million last year.

"We had an exorbitant amount of volume last year, especially with American Express, which charges very high fees," the treasurer said.

"In the past we were able to absorb (fees) off the interest we earned off credit card moneys coming in. But when interest rates dropped it turned that around," she said.

"It was the economy, that's why our volume went up. People don't have money to pay so they use their credit card," she said.

Logan said she is renegotiating the contracts with credit card companies.

"Fees will be charged to the consumer, so it will be up to the consumer whether they pay by credit card. They will know what their fee will be and can choose whether to pay it," she said.

Logan said she will turn the credit card contracts over to Kubic and the county administrative staff.

"I don't have any problem with him looking at it at all," she said. "I'm also having him (Kubic) review the contract with the bank that we use for credit cards only, which allows us to reconcile that account easier," she said.

"That contract is being reviewed and renewed because it had language in it about credit card fees," she said.

The credit card situation is one part of an ongoing dispute between the Treasurer's Office and the County Council and its administrative staff.

Logan is an elected official in an office enabled by the S.C. Constitution, so she is essentially independent of county government. Yet the Treasurer's Office is responsible for collection, safekeeping, investment and distribution of the taxes that fund county government.

Logan and her administration of the Treasurer's Office have been under fire for weeks in the wake of an embezzlement scandal in which a former employee and her boyfriend are accused of stealing more than $210,000 of public money.

Kubic has called for Logan's resignation and the Beaufort County Council adopted a resolution May 24 asking her to step down.

But Logan has adamantly refused to quit the position that pays more than $80,000 a year.

The audit, by the Atlanta accounting firm KPMG, revealed a score of problems with Treasurer's Office procedures in relation to the annual delinquent tax sale. They include:

Manual record-keeping for tax sales and redemptions;

"No supervisory review of any documentation for properties that are redeemed;"

Delays in bank deposits from tax sales;

Discrepancies between redemption payments and the amount deposited;

"No segregation of duties between the collection, recording and reconciliation of redemption payments;"

Inconsistent accounting treatment;

And lack of "institutional knowledge" in Treasurer's Office administration.

The forensic audit also notes:

"The problem of compartmentalization is pervasive throughout the Treasurer's Office; that is, individual employees do not understand the entire business process of the office. Treasurer Logan's subordinates may comprehend their own specific job but do not seem to understand the proverbial 'big picture' of the responsibilities and job functions of others."

Also, "a rubber stamp of Joy Logan's signature is kept in the back office. Many employees have access to this stamp. This stamp is used routinely on official county correspondence."

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Firstly, I question the validity of the $1.5 million figure, but with accurate records, same should be easy to substantiate. Secondly, government entities who accept payment of tax debt via credit card, bank debit, or other electronic means, routinely utilize third party payment gateways to avoid conflicts of interest, and to ensure the security of credit/debit card holder's account numbers and personal information.The gateway service providers "earn their keep" by collecting and charging a "convenience fee" on top of the tax debt owed, and all is clearly disclosed in advance and on billing statements forwarded to consumers. To wit, the Internal Revenue Service follows this exact model. Now comes Joy Logan advising that the County is losing substantial sums of money by assuming the obligation to pay transaction fees. In essence, Logan is operating as a "hedge fund," betting the float off of interest earned will offset the associated transactional costs. I strongly question the Treasurer's legal authority and jurisdiction in this endeavor. Lastly, I make note that nowhere on the Beaufort County Treasurer's site is there any notice of, or advance disclosure available to the taxpayer or consumer to review with regard to any matter hereof.

No doubt that the fee should have been added to the tax when using credit cards. Typically, about 4% is the fee charged on any credit card to the vendor.

The advantage of the credit card option is that many people paid to save late penalties. But this early payment may have had some advantage to the county when one figures the money is collected and deposited in interest bearing accounts. At the time the credit card option was initiated some years ago, CDs were earning more than the 4% fee, so the county was earning some on the early payments.

Needless to say, this should have been changed after the interest rates became low. Surely this will be addressed now.

The credit card option had to be passed by County Council. Wonder why a fee wasn't mentioned then?

If administered properly, not a thing wrong with the notion of collecting tax payments via credit/debit cards or by other electronic means, and the practice is far from novel. However, the management of cash and investments is the sole responsibility of the County Treasurer. Assuming the investment policy is to minimize credit and market risks, either the Treasurer has not been focused, or has been bound by unfavorable vendor contracts for years. To wit, national six month CD rates have averaged only .41% for the past twelve months, and have not averaged more than 4.00% since 2008. Consequently, this endeavor has been a net money loser throughout the past three years.

Every year, the papers are full of advertisements for bidding on properties with unpaid taxes.

But this is an annual strategy by many property owners including developers to help their cash flow by letting the properties go up for sale, letting someone bid on it and then redeeming it within one year. They have to pay the bidder the principle , plus bank rate interest. So the strategy bottom line is to postpone taxes and then borrow the money from the bidder.

Whether the credit card option collects more taxes up front or not is not known. But that much delay in collecting taxes has to be an expense for the county.

Heron, if there is logic behind your thinking, it's lost on me. "Collecting more up front" is immaterial. Re-investing the same money at a loss is a detriment to the County. Delayed tax receipts are a gain, not an "expense", as same accrue late penalties.

That was my point. We don't know whether the credit card is better for the county or not, but we have no information to form a conclusion.

We know that the 1.5 million due to the card company is an expense. We know that the county should charge a fee for those transactions.

Most businesses like to have money paid upfront for cash flow, which allows them to invest either in some financial option or to invest in more infrastructure or more employees. Keeping track of late payers and dunning them requires expenses including extra staff or a contract with a collection company.

But that is irrelevant to the county, except for the investment part. True that penalties are charged for late fees, but the cost of managing the late payers including the advertisements and actual sale may negate the penalty revenue.

We have a CFO for the county, so I wonder if he couldn't answer some of those questions.

@ HERON: Excepting those lucky enough to receive external bail-outs, all businesses, individuals, or other entities that manage to negative cash flows do not survive. To the instance here, cash flow, time value of money, and re-investment rates are all known variables, easily facilitating prudent risk management. In short, anyone with basic math skills can handle the calculations. Happily, we are in agreement on one point, that being, Joy Logan should either be replaced by someone equipped with basic skills, or be required to defer to anyone with an understanding of the fundamentals necessary to do the job. Nothing personal here, as either you get it, or you don't, and time is of the essence, given that sooner or later, you run out of other people's money to spend. Sadly for the County, the numbers prove the truth.

Agree that a negative cash flow isn't desirable, but many businesses do survive if the cash flow problem is temporary. Businesses with assets can borrow on those assets. I know because I have been involved with 9 different businesses, both as a partner or in an LLC with investors. My present business was a sole proprietor, but I retired and closed that in May of this year.

As for Logan, she has many years of experience in different financial institutions locally as a comptroller, treasurer and CFO. She has had 19 years or experience as county treasurer without a blemish until this year. She has had so much confidence by the electorate that the Democratic party didn't even feel the need for a candidate and no independents have tried. It is a shame and a fiasco that she is taking the heat for one mistake and being made a scapegoat by some. Many assume that the Treasurer is totally and solely responsible for every responsibility in that department. But she must follow guidelines issued by council as well as the fiduciary laws.

However, Henderson may be a good candidate and a nice guy, but banking experience is only a starting point for the job as treasurer, especially if he specialized only in one aspect, like loans. What is his banking experience? Approving loans is different from a treasurer, or a CFO, or a comptroller.

Nineteen years is indeed a long span. I'm receptive to seeing an enumeration of the precise past positive benefits Joy Logan has delivered to the table. We learn from the past, but I'm really more interested in hearing her game plan to afford the best future for the well-being of Beaufort County. To date, the dearth of any non-subjective positive past or future benefit puzzles this voter. In summary, show me something.

Surprisingly, I hope Henderson will succeed in getting on the ballot even though I know little about him. Competition is always good. As one Olympic contender was quoted, "My best friend is my competitor because he brings out the best in me." It is also a hallmark of the American way.

The election campaign will bring out information that we don't have now. I hope the campaign will be clean without the smears we sometimes see like the governor's race.

Unsurprisingly, I'd prefer to see Joy Logan do the right thing by resigning, offering the two-fold benefit of a credit to her character, plus serving the best interests of the County. Beyond, I'm in total support of abolishing the office of Treasurer as an elected position.

Your idea is a good, Heron. In the interest of transparency and "getting the facts out there," here is a link to the complete 28 page forensic accounting report of the Beaufort County SC Treasurer's Office dated 22 June, 2010 by the firm KPMG, commissioned at the request of the Beaufort County Solicitor and the Beaufort County Administrator. Anyone interested in better government and a better future for Beaufort County should read this report.http://www.scribd.com/doc/33867960/KPMG-Report-of-Beaufort-County-Treasu...

Why stop with the Treasurer's office? There are other departments in the county government and some emails to the Beaufort Tribune and scuttlebutt from employees that I have heard or that have been passed around say there are problems. For better government , do a comprehensive evaluation of all departments, especially the Recreation Department. Sure , it will cost money, but all financial institutions have internal audits frequently. Just a part of doing business.

I remember two bankers in Beaufort that spent some time in jail. Not for embezzlement, but not following the new banking laws. This was in the early '60's when small local banks handled loans to farmers and fishermen on personal promissory notes with no collateral. They knew the clients and they paid the notes off on time. But the laws changed saying the notes had to have collateral. The two bankers simply avoided the law to help their clients out by keeping the notes in a desk drawer and not recording it. Business as usual for more than a lifetime. But bank examiners found the notes and both bank officers were prosecuted, even though they themselves received no personal gain.

I was a church treasurer for more than 30 years and our insurance requested that we use security measures that are standard. Like having at least three unrelated people count receipts. Then a 4th person would make the deposits and give the treasurer the receipt. The treasurer would give monthly reports to the church governing body and a final report to the congregation. Then an internal audit by either qualified members or a paid out side firm.

My Dear Heron, I suppose we can take on the above, the conflict in Darfur, apartheid in South Africa, and even find room to assist in the woes with your church, but right now, the discussion of this forum is focused squarely on Joy Logan and the Treasurer's Office. By chance you missed the link to the KPMG Forensic Accounting Report, it is repeated here for your ease of reference:http://www.scribd.com/doc/33867960/KPMG-Report-of-Beaufort-County-Treasu...

Yes I have read the audit the day it came out since it was linked in the Beaufort Gazette.

Any audit has recommendations and that is all they are. Suggestions to improve security or expedite management systems. I was on the board of one local bank for several years and we received audit reports quarterly. Some recommendations were taken and others discarded.

But one should not read that report as an indictment by a prosecutor might in a felony case. The auditors merely making suggestions. They are not saying any laws were are broken because they are not. The Treasurer has the fiduciary power to accept or discard suggestions. Like the governor or even the POTUS, they are elected and manage as they see fit. Only in the case of broken laws can one be prosecuted and then as a result removed.

By the way, my church is doing fine. I posted that to let you know I am familiar with fiduciary responsibilities. I admit getting off subject as I usually do on the blogs.

Considering the depth of your past experience, Heron, and given your prior knowledge and study of the KPMG Treasurer's Report, perhaps you would be good enough to grace us with insight as to which of the recommendations we readers should discard as imprudent, or any findings you note to be inaccurate in the document found here: http://www.scribd.com/doc/33867960/KPMG-Report-of-Beaufort-County-Treasu...

Logan has the report and has not commented except that it was instructional. I suspect she will provide more comments later either to council or to the public.

My concerns at present are the delays in deposits. Cash in particular should be deposited daily or kept in a safe. Also the availability of her signature stamp is a concern. It should be locked with only one or two employees with access and a log should be kept on who has it. I also question the expenditures to Lands End and the meals. Logan needs to explain those. Personal expenditures have no place in a fiduciary account.

It sounds like the department is well divided in duties to reduce the probabilities for embezzlement, but no system is 100% immune. White figured a way and the prosecutor will probably give a detailed report in the indictment.

Heron, after the passage of much time, and in the absence of hearing any rebuttal from Joy Logan, I am given to the conclusion she is in complete accord with the findings and recommendations of the KPMG Report. Only Joy can speak her mind, and for me to even think she is in disagreement would be presumptuous at best. In closing, if the report linked below is good enough for Joy Logan, I'm good to go.http://www.scribd.com/doc/33867960/KPMG-Report-of-Beaufort-County-Treasu...

There are several takes to be made about her lack of response. But I suspect her lawyer has made the standard statement about "clam up". He is also conducting his own investigation for her, so there will probably be no comments until he reaches a conclusion. That will probably happen before the election in November and there will be the usual campaign rhetoric beforehand. His conclusions will become a part of that. I and many others are waiting patiently for his responses.

Meanwhile, I would like for Henderson to publicize his credentials other than just having been a banker. He will probably wait until the campaign if he becomes certified from the write ins.

I find the attitudes of Kubic and Logan to be cavalier at best. In my lifetime of career, including five years of accountable government work (municipality/county/legal) I have never seen such lack of concern over such a huge amount of money gone missing!! So now we have the $250,000 missing, but another investment of $250,000 for the forensic accounting...which if you ask me is as much of a rip-off as the original rip-off. Total $500,000 or half a million! My God...so was the tax increase just a red herring to keep us from looking too closely at the make up of County Staff under whose watch this happened? I say they both go! Kubic & Logan, no matter whose good old boy he is.

I am fascinated to read that so many people feel Ms. Logan should continue in office. I don't know the woman. All I know is that she has failed in her fiduciary responsibility to this county and possibly to the State. Either she didn't REPORT, or she isn't the only one who "doesn't get it." Kubic runs the county. In the end, this was on his watch. He is a paid administrator whose credentials in Public Administration as well as that of his Chief Financial Officer within the county, should have their eyes trained to note such blunders...to give it a more innocent name. If anyone goes, they all three go. Time for new blood. Or do we all want another slap in the face? She has made fools of us all.

County Government job titles can be confusing, but responsibilities are not. Consider the following:
COUNTY ADMINISTRATOR - Implements the policies of the elected County Council. Does not make policy, and has no spending authority.
FINANCE/CFO - Maintains financial records. Does not make policy, and has no spending authority.
TREASURER - Has sole responsibility for the management of all cash (taxes) and investments. Does make policy and does have spending authority.
It is important to note that none of the following have any authority whatsoever with respect to the affairs of the Treasurer:
1. County Council
2. County Administrator
3. Finance/CFO
4. Independent Auditors
In perspective, it is equally important to note that the Treasurer does not "answer" to any of the above, rather, is accountable only to the voters. Anybody who is looking for answers should begin by following the money, as this is indeed, the bottom line issue.

I don't know for a fact, but I believe the treasurer is limited in spending by state statutes. A discretionary fund for goods and services required by the unique responsibilities of the office. The disbursements should be limited to the statutory limits. Also a budgeted amount that I believe is passed by council.

Any elected office has statutory limits and budgeted items, even the governor. But there has to be an accounting and transparency. Council should be aware of the activities in those budgeted items. Council should ask for timely and regular reports.

But I agree with Bill Withers that accountability is necessary. And also that no one is above the law.

What am I missing? Taxpayers were charged fees to pay with credit cards. The amounts they paid were not sufficient to cover what the credit companies charged. Is the problem that the fees were not set so that there was a cushion to allow for the difference in charges from one credit company to another? Does the Treasurer's office not have access to a calculator?

We learn from the KPMG report that at least one Treasurer's Office employee didn't have enough to do and was therefore given permission to do personal tax preparation whereupon others did it too. But nobody had the time or inclination to look into the credit card fees and to maybe check the previous year's data about how that system was working?

Sorry to be the fact bearer, PeachBlossom, but users of credit cards paid ZERO in fees. All fees paid were deducted from funds received, creating an unjustifiable expense to the County for the one fiscal year of $1.5 million.

But, but, but...I could have sworn I saw a sign about an extra charge for credit cards at the Treas Office when I paid my taxes last year. Maybe not. Anyway I think I am also wrong about where I saw the tax prep info. Wasn't that the Sheriff's Dept investigation?

Thanks, bill withers. I tried to check out the fees on the County website but couldn't find anything about it so went with my (flawed) memory.

You win, PeachBlossom! You will not find a fee disclosure on the County website, nor in the Treasurer's Office, simply because, taxpayer's are not charged a fee. The math goes like this: If your tax bill is $1,000 and you pay with your credit card, the County nets $960, assuming Miss Heron has factually stated the that the Credit Card people receive 4.0%. Thanks for playing!

No, I don't win, because I'm a taxpayer, and I paid my taxes on time in full with a check with the strange notion that my money would go toward necessary County expenses. Who wins are the credit card companies AGAIN! And I guess I won't say who I think should have the giant "L" on her forehead.

Well then, PeachBlossom, if you paid by check, then you overpaid your fair share of taxes. Look at it like this. Let's say two taxpayers have identical bills of $1,000, and one pays by check, and the other by credit card. If the County is satisfied by receiving $960 from one, why does the other have to pay $1,000? It's only money, PeachBlossom, and last year, it was just $1.5 million. Don't despair, you have a whole year to make more, and do it all over again. The General Ledger thanks you.

[sigh] well, at least I got the senior discount or whatever they call it and I saved 44 cents by going in person and maybe a little bit by waiting until the last day. At my age (70) I don't pay too much in advance.

All of the banks charge for credit card fees. They charge the vendor about 4%, but the rates vary with American Express charging the most. Of course, if you don't pay the monthly balance, then they also charge the purchaser with fees, depending on the purchaser.

Logan was one of the first in the state to make credit cards available for taxpayers. I read in the paper that the user fee must be approved by the county council and she has sent the present contract and details to Kubic to review and for council to approve a user fee.

I agree that this should have been done in the beginning, but departmental relations haven't been the best under the Ribaut Road roof for several years now.

PB, the Homestead Exemption is for homeowners 65 and older and is 50,000.00 off the appraised value of the house, but not the land. It is not automatic and one has to apply for the exemption.

Ah, Heron, inquiring minds would like to know how it is that you have come by the following privileged knowledge:
a) That the County has a "contract" with one third party payment vendor/facilitator rather than direct contracts with banks or the individual credit card companies...
b) That Joy Logan has forwarded the "contract" and details to the County Administrator...
c) The source of your information that County Council approval was required for collection of taxes via credit card without fee.
d) The several years of negative Karma under the roof of the departmental offices on Ribault Road...
Could it be that, you are, in fact...

The article was in the Beaufort Gazette over two weeks ago. I tried to find the article in their archives, which locks up today and wouldn't find anything. Maybe later. Maybe you can find it if interested.

As for the negative Karma in the county office building, ask some people that work there.

The great and powerful Wizard of Oz himself could't deliver a two week old newspaper article about a meeting that happened just three days ago. To the Ribaut denizens, all seem well fed and happy, at least in the Treasurer's Office. Come on, Heron, time to 'fess up...

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